Welcome to Retail Opportunity Investments 2016 Fourth Quarter and Year End Conference Call. Participants are currently in a listen-only mode. Following the Company's prepared remarks, the call will be open up to your questions.

Please note that certain matters discussed in this call today constitute forward-looking statements within the meaning of Federal Securities Laws.

Although the company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, the company can give no assurance that these expectations will be achieved.

Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause actual results to differ materially from future results expressed or implied by such forward-looking statements and expectations.

Information regarding such risks and factors is described in the company's filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K.

Participants are encouraged to refer to the Company's filings with the SEC regarding such risks and factors, as well as for more information regarding the company's financial and operational results. The company's filings can be found on its Website. Now I'd like to introduce Stuart Tanz, the Company's Chief Executive Officer..

Thank you. Here with me today is Michael Haines, our Chief Financial Officer; and Rich Schoebel, our Chief Operating Officer. We are pleased to report that the Company posted another stellar year of growth and performance in 2016.

In fact it's our seventh consecutive year as a shopping center REIT where we again achieved solid growth and created value across every aspect of our business.

Starting with our portfolio growth, during 2016 we continue to have great success in capitalizing on our long-term relationships to secure a number of exceptional acquisition opportunities that fit our disciplined strategy and our portfolio perfectly.

We again completed over $300 million of property acquisitions, specifically during 2016; we acquired eight terrific grocery anchored shopping centers encompassing over 750,000 square feet for a total investment of $333 million.

If there is a theme that best describes our class of 2016 acquisitions we would have to say there is not just one theme but three. First, would be location.

Our 2016 acquisitions are all situated in truly irreplaceable locations in the most sought after markets on the West Coast but more than that it's their strategic fit within our existing portfolio.

Importantly our 2016 acquisitions served to strengthen our presence in certain key markets and specifically in select densely populated highly protected communities. As an example on our Seattle market, we continue to strengthen and expand our presence in Bellevue which is considered one of the most dynamic communities in the Seattle market.

We also added to our presence in Northern California, specifically in Monterey which is another highly desirable, highly protected community.

In addition to expanding our presence in certain key communities, we also established a new presence in several highly sought after communities within our core markets that are extremely protected and almost impossible to penetrate. Most notably, we acquired several exceptional shopping centers in Santa Barbara and Westlake Village.

The second theme regarding our 2016 acquisitions is their pure-play grocery anchored daily necessity focus. Each property is well leased to a diverse mix of retailers providing basic consumer goods and services tailored to their surrounding customer base.

This pure-play focus combined with their irreplaceable location attributes translates into a very reliable and stable base of cash flow. The third theme with respect to our 2016 acquisitions which we are most excited about is the upside potential.

We are already hard at work at retenanting and recapturing below market space that together with we reconfiguring certain spaces as well as pursuing expansion in opportunities, we expect to increase cash flow by as much as 15% to 20% over the course of the next 12 to 24 months.

And then beyond that we expect to drive the cash flow even higher as additional anchor leases roll further out that are currently 2 to 3 times below today's market rents.

Safe to say that we are very enthusiastic about our 2016 acquisitions; as much as we're excited about the opportunities to build value with our recent acquisitions, we are equally excited about our ongoing success with enhancing the value of our existing portfolio. In 2016 we again took our portfolio to new heights.

For the fourth consecutive year, we achieved a year-end lease rate above 96% finishing 2016 at a very strong 97.6%. Additionally, we again posted very strong double-digit same space rent growth achieving a 29% cash increase on new leases which serve to drive our same center NOI to new heights whereby we achieved a 5.3% cash increase for the year.

Turning to our balance sheet; during 2016 we continued our long-standing disciplined strategy of raising capital from a balance of sources to prudently fund our growth. Specifically we raised $424 million of new capital including over $224 million of common equity. As a result, our debt ratio at year-end was the lowest year end level since 2011.

Our balance sheet today by and large is as strong as it's ever been. Lastly, in light of our growth and performance in 2016, we are pleased to announce that the Board has increased the Company's dividend by 4.2% representing the seventh consecutive year that we have delivered increased dividends to shareholders.

Now I'll turn the call over to Mike to take you through the details of our financial results.

Mike?.

Thanks Stuart. For the 12 months ended December 31, 2016, the Company had $237.2 million in total revenues and $77.2 million in GAAP operating income as compared to $192.7 million in total revenues and $59.3 million in GAAP operating income for 2015.

With respect to property level NOI on the same center comparative basis, cash NOI for the full year 2016 increased by 5.3% over 2015 as Stuart noted.

For the fourth quarter of 2016, the Company had $63.1 million total revenues and $22 million in GAAP operating income as compared to $51.3 million in total revenues and $16.3 million in GAAP operating income for the fourth quarter of 2015.

In terms of property level net operating income, on the same similar comparative basis, cash NOI increased by 5.5% for the fourth quarter 2016 as compared to the fourth quarter of last year.

Turning to GAAP net income attributable to common shareholders, for the full year 2016 GAAP net income was $32.8 million or $0.31 per diluted share as compared to GAAP of $23.9 million or $0.25 per diluted share for 2015.

For the fourth quarter of 2016, the Company had GAAP net income of $9.6 million equating to $0.09 per diluted share as compared to GAAP net income of $6.9 million or $0.07 per diluted share for the fourth quarter of 2015. In terms of funds from operations for the full year 2016, FFO was $124.8 million as compared to FFO of $96 million for 2015.

On a per share basis FFO was a $1.08 per diluted share for the full year 2016 representing a 12.5% increase over FFO per diluted share for the full year of 2015. For the fourth quarter of 2016 FFO totaled $33.2 million as compared to FFO of $25.9 million for the fourth quarter of 2015.

On a per share basis, FFO was $0.27 per diluted share for the fourth quarter of 2016 representing an 8% increase over FFO per diluted share for the fourth quarter of 2015. Turning to the Company's balance sheet; we raised $424 million of capital during 2016 as Stuart mentioned from a balance of sources.

We raised a total of $224 million of common equity including $46 million in the form of OP units that we issued in connection with acquiring several shopping centers. Additionally, we raised $133 million to republic stock offering last summer and over the course of 2016 raised approximately $45 million through our ATM Program.

In terms of debt capital, in September we raised $200 million through our private placement of 10-year senior unsecured notes that [indiscernible] fixed rate of 3.95% which was a new record low coupon for the Company.

Taking into account our capital raising initiatives during 2016, at year-end the Company had total market capital of approximately $3.7 billion with $1.2 billion of debt outstanding. According to debt-to-total market cap ratio just 31% at year-end which as Stuart indicated represents a new five-year low for the Company.

That's particularly noteworthy when concerning that during the past five years we have grown by more than five-fold. Yet we have carefully maintained our strong and conservative financial metrics. In fact, for the fourth year in a row, we finished the year with an interest coverage ratio for the fourth quarter at or above a very solid four times.

Additionally, we continue to work hard at maintaining a large unencumbered pool of properties.

Over the past five years in step with our portfolio growth, our unencumbered GLA has grown from about 2.8 million square feet or roughly 89% of our total portfolio of five years ago to today being over at 8.8 million a square feet representing 95% of our total portfolio.

Along with the flexibility afforded by having a large unencumbered pool of properties we continue to have considerable capacity with respect to our unsecured credit facility; in fact at year-end, we had $98 million drawn on our $500 million line which we also have the ability and capacity to increase to as much as $1 billion.

In short, we continue to maintain a strong conservative financial position. Looking ahead at 2017, in terms of our initial FFO guidance we currently expect FFO to be between $1.10 and $1.14 per diluted share for the full year of 2017.

With respect to acquisitions, our guidance assumes that we will acquire 300 million to 400 million of additional shopping centers during 2017 at going in cap rates between 5% and 6% on average. Additionally, with respect to our current portfolio our FFO guidance is based on maintaining occupancy to 96% to 97% range.

In terms of same center NOI, we currently expect to achieve same center cash NOI growth of approximately 4% for the full year 2017. Now I'll turn the call over to Rich to discuss property operations.

Rich?.

Thanks Mike. To start from a leasing point of view; 2016 was another terrific year in every respect. Demand for space continued to be very strong and the daily necessity neighborhood shopping center sector, particularly on the West Coast, and specifically as it relates to our protected supply constraint markets and our portfolio.

Importantly, the demand continues to become from an ever-increasing broader mix of retailers and that applies to national, regional, and local retailers; all seeking to capitalize on the strong, long-term fundamentals of our sector in core markets.

Perhaps the best evidence of this can be found by looking directly at our accomplishments and results for 2016. Beginning with occupancy, as Stuart highlighted for the fourth consecutive year we achieved a portfolio lease rate above 96%.

Specifically at year-end our portfolio stood at a very strong 97.6% lease including having 46 of our shopping centers at a full 100% lease, up notably from our record set a year ago when 33 of our properties were 100% leased.

Breaking the 97.6% number down between anchor and non-anchor space; at year-end 2016 our anchor space was 99% leased and our shop space was 95% leased.

With respect to the economic spread between build and leased space, back a year ago we started 2016 with the spread being 4.4% representing a total of about $6 million in additional incremental annual base rent on a cash basis.

During the course of 2016, we are pleased report that essentially all of the new tenants associated with that 4.4% spread took occupancy and commenced paying rent.

Now taking into account our leasing activity during the last year, as of December 31, 2016 the economic spread stood at 4.7% representing $8.1 million in additional incremental annual base rent on a cash basis.

Turning to our leasing statistics for the past year, during 2016 we executed 386 leases totaling approximately 1.3 million square feet of space which is more than double the amount of space that was originally scheduled to expire back at the beginning of the year.

Breaking down the 1.3 million square feet of leasing between new and renewed, we executed 168 new leases totaling approximately 585,000 square feet achieving a strong 29.3% increase in same space cash rents. And we renewed 218 leases totaling approximately 763,000 square feet, achieving a solid 12.2% increase in cash rents.

And just to clarify, the 12% increase on renewals is a blended number that includes both tenants that had predetermined renewal rents and tenants where we are able to negotiate the renewal rent.

During the fourth quarter we executed 107 leases totaling 447,000 square feet including 49 new leases, totaling 241,000 square feet achieving a 33.1% increase in same space cash rents and a renewed 58 leases totaling approximately 206,000 square feet achieving a 16.7% increase in cash rents.

One of the key drivers of our strong same space increases is our ongoing recapture initiative whereby we are recapturing a combination of below market and underperforming spaces and releasing those spaces to much stronger retailers and considerably higher rents.

A year ago at the beginning of 2016, we had identified between 200,000 and 300,000 square feet of potential recapture opportunities which if successful we estimated could add around $1.5 million in annual incremental cash flow.

We are pleased to report that during 2016 we successfully recaptured approximately 330,000 square feet of space achieving a 54% increase in cash rents overall equating to $5.3 million of incremental annual cash rent.

Looking ahead, in 2017 we intend to continue our recapture initiative and currently have identified roughly 250,000 square feet of additional potential opportunities which if successful we estimate could add as much as another $2.5 million in annual incremental cash flow. Bear in mind our recapture efforts are very fluid and constantly evolving.

Lastly, we are currently underway with 11 different pad developments that together total roughly 50,000 square feet and when completed we expect will generate a 17% yield on cost on average equating to approximately $1.9 million of additional annual rent. We expect to complete the bulk of these during the second half of 2017.

Now I'll turn the call back over to Stuart..

Thanks Rich. With another successful year under our belt, we have our sights firmly set on the New Year. We are pleased to report that we are off to a good start. In terms of acquisitions we already have three shopping centers committed thus far in our pipeline for a total of $92 million.

Additionally as rich touched on, we continue to be very focused on enhancing the value of our portfolio and have a number of initiatives underway that will continue to drive our internal growth.

In fact, taking into account the current spread that Rich spoke off, the $8.1 million of additional annual rent from new leases that we saw in the latter half of 2016; and then adding to that the $1.9 million of annual rent from our pad development together; just those two value-added initiatives alone will add $10 million of additional annual rent.

However, because the majority of this is tied to anchor spaces it's somewhat difficult to estimate the timing of when the bulk of this $10 million will start to truly impact our financial numbers. We currently expect that the bulk of it will begin to flow through our numbers in the latter half of 2017 with the full impact occurring in 2018.

With this in mind, we are taking a prudent approach in terms of our initial FFO guidance for 2017 including our same center NOI guidance as Mike discussed.

Finally, as we embark on our eighth year as a shopping center REIT, we remain as committed and as confident as ever in our ability to continue executing our disciplined risk adverse strategy; the same core strategy that our team has pursued for over 25 years in the same core markets.

It has been our discipline and our singular focus on the daily necessity sector in the best markets that has been the cornerstone of our success and we have no doubt will continue to be the core driver in our ability to build value and take the Company to new heights in 2017 and beyond. Now we'll open up the call for your questions.

Operator?.

[Operator Instructions] Our first question is from the line of Christy McElroy of Citi. Your line is open..

Good morning.

Stuart just a follow-up on the comment you just made about the additional $10 million of anchor space rent coming online unlikely until the second half; how does that translate into same-store NOI impact? So if you think about the 4% growth rate overall through the year, what does the trajectory look like?.

The first half of the year will start out a bit less than what we have guided the street in terms of same-store. However, as we move through the year that will accelerate, especially as we get into the third and fourth quarter.

The other thing to look at is the impact in terms of '18 because as soon as all of this does come online in late '17 it will have a very positive impact on '18..

Okay.

And then in terms of the financing behind the 300 million to 400 million of acquisitions that you're talking about through the year; can you give us maybe a sense - Mike, can you give us a sense for sure the timing and size of another bond deal and then in terms of the equity issuance that's baked into guidance; is that more radical or would you expect to do a larger size deal somewhere in there throughout the year that maybe would cause some dilution in terms of timing?.

Well, our guidance is typically based on - consistently we've done in the past, you know, meaning prudently raising capital from rider sources, always maintaining our last time credit metrics.

It's always dependent on the timing and velocity of the acquisition opportunities that we come across that's going to drive how we finance those, whether be debt or equity..

Okay but is there any specific bond deal in there, sort of baked into guidance?.

In our current guidance, no there is not..

Okay, thank you..

Thank you. Our next question is from Paul Morgan of Canaccord Genuity. Your line is open..

Hi, good morning.

Just maybe on the deals that you have under contract, can you provide any kind of initial color there, may be in particular the one in Santa Rosa; I guess that's maybe a seller you put forth, I see that correctly but it's also not atypical ROIC deal in the sense it's not grocery anchored; so have you any color about those transactions and kind of what you see as the upside there?.

Sure. Well, we're very excited about the pipeline.

Sitting here today in terms of starting out with Santa Rosa; I don't know if you recall or not but this is owned by the same owner as the Crossroads, the Shear Family and we do have a role follow-on, everything he owns on the West Coast which not only includes Santa Rosa but some really high-quality assets in Orange County.

In terms of Santa Rosa, our goal here will be to retrofit one of the anchors and put a grocery store in, that is the objective. And we're currently - even though we haven't closed on the transaction we're currently underway in terms of meeting that objective.

So we're very excited about the acquisition, it has been - the family built the property, it's never traded in the market and more importantly, the property is in a really strong location right on the 101 Freeway. Along with rents that are typically 15% to 20% less as it relates to the market; so that's sort of the color on Santa Rosa..

Great, thanks.

And then just - I guess going back to same-store, so last year I think your initial guidance was 4% to 5% and you came in at 5.3% above the high-end there and if I think about kind of where you're starting this year at 4%; I mean relatively where you ended the fourth quarter, kind of - how should I think about what the mixes have well - it's early in the year, we try to be conservative at this point versus there are some deltas maybe from space we're taking off-line, they would cause a drop that you know is going to happen in the first half of the year, kind of what's the mix between the two of those thought processes?.

Sure. Well, I mean in terms of same-store; I mean as Rich articulated, we had a lot of initiatives that we successfully were able to accomplish in '16 and it's going to really drive NOI certainly in the later part of '17 as we've articulated and certainly as on a full run rate basis in '18.

So a lot of these initiatives along with the two sports stores that we had gone vacant that we released will start the year off a bit slower again in terms of same-store but it will pick up quite dramatically; very quick and with some it will pick up very nicely as we move into the third, the latter part of the year as we would say.

So it's really a combination of the initiatives that we did along with the two banks; the only two power centers that we own that really drove the same-store to follow a bit in the first half of the year. But again, as we look at where things sit today, we're confident that that will move up very quickly as we move through the year..

Okay, great, thanks..

Thank you. Our next question is from Collin Mings of Raymond James. Your line is open..

Good morning. Stuart, first question; I just want to go back to Christie's question real quick; just as far as on the debt.

Mike, can you just update us on your thoughts around your mix of floating rate debt and if you might look at swapping anymore that out this year?.

As you know, we still have $200 million on the term loan that's not swap and that's safe to say we're always keeping a careful eye on that floating-rate debt exposure. So at year-end we had roughly 75% of our debt was effectively fixed rate. And we're comfortable with that at the present time.

We always keep an eye on the interest rate environment but we're just kind of holding tight right now..

Okay.

And then Stuart, just going back to the transaction market, really two questions; first one just being on the - as far as grocery anchored centers, clearly I think as we've heard over the last several months, there has been, cap rates there have been maybe more resilient than some of the power centers; so just curious what you're seeing in your market as far as any sort of upward pressure on cap rates.

And then just along those lines, just related thoughts around your disposition plans at Sacramento?.

Sure. So in terms of the West Coast, my comments really refer to very affluent or higher income dense markets on the West Coast. So the primary markets that we operate in - you know, we're yet to see any shift in cap rates as it relates to high-quality grocery anchored centers.

Certainly the sea shopping centers in the secondary markets, we're seeing more properties sort of come to market but fewer of these properties are actually trading.

So there is - persistently there is a shift in pricing sort of underway but it's really for the less desirable properties; and additionally, the power center sector properties [indiscernible] with a lot of boxes we have seen on the West Coast have had a significant shift in pricing.

And by our appetite, almost 200 basis points on the West Coast but as it relates to the type and location of the shopping centers we focused on there has been no change thus far..

Okay, great.

And then just following up as far as on potential disposition plans and what might be included in guidance on that front?.

We have $50 million of dispositions in our model or in our guidance. And we consider bringing or we do currently have some non-core properties on the market..

Okay. I'll turn it over, thanks guys..

Thank you. Our next question is from Todd Thomas of KeyBanc Capital Markets. Your line is open..

Hi, good morning. Just a follow-up on pricing and cap rates, maybe I'll ask the question a little differently here. I guess you talked about 5% to 6% initial cash yields on the 2017 acquisitions.

I think that's a little bit higher than the cap rates that you've seen over the last several quarters; is the acquisition pipeline for 2017 comprised of different product or are you looking at anything that's slightly different in terms of markets or locations, you know, in general maybe you could just talk about the pipeline little a bit in the context of those three themes that you talked about related to the 2016 acquisition pool?.

So in terms of markets, we certainly have very good success in sourcing off-market opportunities across our core West Coast markets. So we are sticking to our knitting as we say, so that's in terms of other markets.

In terms of cap rates, again dominant high-quality grocery anchored shopping centers have not moved in terms of what we are looking at buying or have bought. So we guide the street as a cap rates between 5% and 6%. That doesn't necessarily mean that values have moved at all because they haven't but that's where we've initially laid out our guidance.

So - but certainly as we look at the first quarter of the year or the second quarter of the year, we don't really see any change as it relates to the cap rates. In terms of - I think in terms of - did that answer question? Your question had a number of questions in it.

But we are moving into other markets and our guidance is not based on what we see in the market, our guidance is based on what we can accomplish through our relationships..

Okay.

And then can you just talk a little bit about trends you're seeing around the grocer, the supermarket industry and the landscape there; you know, we're hearing about some new entrants into the space, some discount grocers; Amazon and some others, what are you hearing and how do you approach investing today or think about it as you fast forward a few years based on what you're seeing and hearing?.

Well, in terms of investing I'll let Rich answer the question on the grocers but in terms of investing, our investment philosophy has not changed for the last three decades.

We constantly look at the risks associated with what we're buying and the discipline in terms of our strategy as to the movement of the tenant base and the risks associated with that movement. I'll let Rich comment on the grocery store business and how that relates to what we see..

Sure. Yes, I mean we still see a lot of grocers that are top of our list in terms of moving into the markets for the first time, particularly in the Pacific Northwest, we have a lot of new entrants into that market along with the current operators looking to increase their market share.

And that's from a broad range of operators from the discounters, all the way up through the full line of specialty grocers..

Okay. And then just two quick questions for Mike; maybe - you came in $0.01 ahead of the high-end of your guidance for the year.

What came in better than expected in the quarter relative to your forecast which you revisited in mid-November? So what drove the better results in the quarter specifically?.

I think we had a little bit more on the revenue side; we had a beat on that side and I think our G&A came in a little bit lower than we actually had expected; primarily comp related but it's G&A - savings on G&A and slightly on the revenue side..

Okay.

And then how much annual rent commenced in the quarter? Was there anything of size that commenced in the quarter that's not being picked up in the quarter on sort of a fully annualized basis?.

I can't think of any….

No, the only thing that was a bit higher in the quarter was percentage rent that our grocers and our tenant base continue to see a very healthy increase in sales with that generated a bit more percentage rent than what normally we would have modeled. But other than that and that's not what I call material by any means.

But it was higher than it was last year and sales are very strong across our portfolio but that to me is the only thing that was a bit different in terms of what we modeled specific to the quarter, right..

Okay, alright, thank you..

Thank you. Our next question is from George Hoglund of Jefferies. Your line is open..

Good morning out there. I've got a couple questions.

I guess first of all just in terms of the recapture and retenanting opportunities; if you could provide a little more color in terms of the types of tenants you're looking to get space back from and the types of tenants you're looking to replace them with and sort of how much downtime should we expect? I guess that's the first question.

And the second one is just in terms of the Ruffle [ph] with the settlers of the Santa Rosa property; how extensive is that in terms of how many more properties does that Ruffle [ph] applied to?.

The Ruffle [ph] has two more properties in Huntington Beach. So - well, Orange County, in terms of - Rich, in terms of the recapture side..

Yes, I mean as Stuart touched on you know, and last year there was the two sporting goods retailers and a couple of grocery spaces; those have typically been re-lead to grocers in certain circumstances, fitness users, and other types of users that are entering these markets.

So primarily it's - you know, as we've said the box is which in our case are typically going to be the grocer or sometimes rightsizing a drugstore that may have more square footage than they need and are willing to give us back 9,000 or 10,000 square feet which enables us to bring in some of those mid-box players..

Okay, thanks. And then just on the - those two additional Ruffle's [ph], do you expect those to be exercised in '17 or is this something potentially down the line and sort of what's the….

I don't know, I mean it depends; I mean typically you're going to be issuing OP units as we did with Santa Rosa and that may vary in terms of the amount but I just don't know because it just depends on the needs of the seller and/or seller and his family in terms of capital. So it's just hard to determine.

And - you know, like Santa Rosa came in a quick phone call three months ago, so we don't know - it just depends on what their needs are in terms of what they will do but we didn't model that as an acquisition in '17 just so you know..

Okay, thanks for the color..

Thank you. Our next question is from Craig Schmidt of Bank of America. Your line is open..

In terms of acquisitions, will California continue to dominate the properties you add to your portfolio?.

It's going to vary. You know, all our markets are really, really strong. I will tell you the Pacific Northwest, I don't think we've seen this much strength in the Pacific Northwest since we've been operating out there for the last three decades. I mean employment growth, job growth; income growth is really, really strong.

So we will continue to be purchasing in all these markets. They are all doing great, we see a lot of economic growth and a lot of demand right now; so California certainly will be on our target list but it's the whole West Coast in terms of where we'll be buying; it just depends on the opportunity more than anything else..

Okay.

And in terms of looking at cap rates for better quality asset; what's the difference between say Southern California and Oregon and Washington now?.

You know, there is no difference anymore. I mean in the core markets cap rates are really the same across all these core markets at this point.

I mean historically, I think the Pacific Northwest may have trended a bit higher; now it's almost the other way around where the Pacific Northwest is almost trending lower than California; and that's because there are smaller markets and economic growth has been so dynamic.

But in terms of the market, it's just going to basically be - I think the cap rates are really the same across all these markets, there really - there is no bifurcation anymore..

Okay, good. Thank you..

Thank you. Our next question is from Michael Gorman of BTIG. Your line is open..

Good morning.

Stuart, if I could just start with a bigger picture question; you're talking little bit about the Santa Rosa acquisition, can you just give a little bit of color on the conversations you're having with other private families and maybe how they are thinking about the next 18 to 24 months given some of the changes we've seen in terms of interest rate volatility and the political climate is? I mean is there - do you feel like there is more upside potential to acquisitions now just given how some of the private families are thinking?.

Yes. We are currently working on a series of transactions in have been working on; that in my humble opinion will come to fruition this year where we will be issuing a lot more equity with these families certainly not lower than we issued equity to the public markets.

So I think you will see more of that in terms of our pipeline because there are things we started working on years ago that have come - are getting closer to the finish line.

In terms of the families themselves, I don't really see yet any sort of acceleration one way or another because I think there is still some uncertainty out there in terms of tax perform and other things that could impact their decisions.

The good news is our pipeline is very active in terms of working with these families but I can tell you that it's made any difference in terms of what we see from a more external perspective..

Okay, great, thanks. And then just on a little bit more of a granular level with some of the anchor recaptures this year; I think we saw some higher CapEx and leasing costs in 2016.

Should we be thinking about a similar kind of run rate on tenant improvements and CapEx in 2017 given the pursuit of more retenanting or recapturing spaces?.

I think it's always hard to pen that one down.

I mean a lot of that CapEx can be driven because we're splitting a box which involves utilities and HVAC and other factors that can drive that cost up but in certain circumstances I'm releasing the box to one tenant and those numbers could be smaller and it also can depends on the use, converting a general retail to a grocer is going to cost us more but it's really hard to peg a number because we don't know where those deals are going to land and the timing on them either..

Okay, great. Thank you very much..

Thank you. Our next question is from the line of Chris Lucas of Capital One Securities. Your line is open..

Good morning guys. Two very simply and quick questions I hope.

One is on the same-store NOI guidance, Michael, if you could maybe give us a sense as to what you're bad debt assumptions are this year compared to how they were a year ago; did they vary at all?.

No, they shouldn't vary, we typically budget kind of a flat 1.5% of revenues as far as our bad debt first half; and then we do specific tenant reviews each quarter. So there is no difference in the guidance on that assumption..

Okay. And then maybe going back to an early question that Christy asked related to the capital side, sort of fourth quarter run rate on shares outstanding is 121, you guided for 124 for the year.

Given the conversations that you guys are having with on the acquisition front, is it reasonable to assume that a good portion of the additional equity is going to come in form of OP units rather than shares issued to the public?.

That's kind of the way it's looking right now as far as what we see in the pipeline in the immediate future. Our model kind of - the way it works is, it kind of backs into an equity need, it doesn't appear that there is a whole lot beyond or what we're seeing in the OP side..

Perfect, thank you..

Thank you. And that concludes our Q&A for today. I'd like to turn the call back over to Mr. Stuart Tanz for any further remark..

Thank you. And in closing we'd like to thank again all of you for joining us today, we really appreciate your interest in ROIC. And if you have any additional questions, please contact Mike, Rich or me directly; also you can find additional information on the Company's quarterly supplemental package which is posted on our website.

Thanks again and have a great day everyone..

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program and you may all disconnect. Everyone have a great day..